• GL
Choose your location?
  • Global Global
  • Australia
  • France
  • Germany
  • Ireland
  • Italy
  • Poland
  • Qatar
  • Spain
  • UAE
  • UK

Pressure mounts on Abraaj

31 May 2018
Banking and finance - building with Share price digital ribbon running along facade
Kuwait Public Institution for Social Security has filed a petition for the liquidation of Abraaj Group's holding company.

The Petition

Kuwaiti pension fund, the Public Institution for Social Security (the "Fund"), filed a petition against the Dubai-based private-equity fund, Abraaj Group ("Abraaj"), in the Cayman Islands on 22 May 2018.

The petition states that Abraaj is unable to repay a loan of USD $100million and USD $7million in interest on the due date, 3 June 2018 – this Sunday. The petition alleges that Abraaj has confirmed that the debt will not be repaid. Abraaj reportedly owes over USD $1billion in bank loans.

Abraaj has historically been a key player in the region, managing USD $13.6 billion of investment at its peak in 2016. Its core focus is emerging markets across the globe, utilising investments in private equity, private credit, impact investing and real estate.

News of the petition by the Fund follows months of turmoil for Abraaj. This stems from a controversial allegation by its health-care fund's investors (including the high profile Bill and Melinda Gates Foundation) that Abraaj has been mismanaging investments, financing its own operation instead of medical infrastructure in Africa and Asia as intended.

Investigations are ongoing and any potential regulatory or legal repercussions remain to be seen. The impact on Abraaj has been widely reported, including: the handing over of day-to-day management of the Group from the founder, Arif Naqvi, to two co-chief executive officers; the restructuring of the group and subsequent departure of several senior executives; and reports that Deutsche Bank is looking to sell its stake in Abraaj.

The petition was filed on the same day that it was reported that United States private equity firm, TPG, is in talks with Abraaj to take control of the troubled health-care fund. If the petition is successful, it could push Abraaj into liquidation of its assets, and recent attempts to restructure the health-care fund would be futile. Alternatively, Abraaj could enter into negotiations with the Fund to restructure its finance. Either way, the filing of the petition is a bold move, and one which forces both parties to come to the table.

Creditors' Rights

As a creditor of Abraaj, the Fund has the right to present a winding up petition in accordance with Cayman Islands Bankruptcy Law.

If Abraaj is unable to pay its debts the courts of the Cayman Islands have the right to force its winding up and distribute its assets to creditors and shareholders (compulsory liquidation).

If the petition is successful liquidators will be appointed to realise and distribute the assets of Abraaj to its creditors in order of priority (winding up). The shareholders would be the last priority. Abraaj would then be dissolved.

Abraaj has the option of negotiating with the Fund in order to secure or restructure its debt. Given Abraaj's efforts to resolve its recent issues, this option remains a real possibility, as long as the parties are able to reach a satisfactory agreement.

Further Reading

We use necessary cookies to make our site work. We'd also like to set analytics cookies that help us make improvements by measuring how you use the site. These will be set when you accept.

For more detailed information about the cookies we use, see our Cookies page.

Manage your cookies

Our use of cookies

We use necessary cookies to make our site work. We'd also like to set analytics cookies that help us make improvements by measuring how you use the site. These will be set when you accept.

For more detailed information about the cookies we use, see our Cookies page.

Necessary cookies

(Required)

Necessary cookies enable core functionality such as security, network management, and accessibility. You may disable these by changing your browser settings, but this may affect how the website functions.

These cookies are required

Tracking cookies

Anonymous cookies that help us understand the performance of our website and how we can improve the website experience for our users. Some of these may be set by third parties we trust, such as Google Analytics.

They may also be used to personalise your experience on our website by remembering your preferences and settings.

Marketing cookies

These cookies are used to improve and personalise your experience with our brands. We may use these cookies to show adverts for our products, or measure the performance of our adverts.